Dollar General 2013 Annual Report Download - page 88

initiatives or the cost of these initiatives exceeding management’s estimates could adversely affect our
business, results of operations and financial condition.
The success of our merchandising initiatives, particularly those with respect to non-consumable
merchandise and store-specific products and allocations, depends in part upon our ability to predict
consistently and successfully the products that our customers will demand and to identify and timely
respond to evolving trends in demographics and consumer preferences, expectations and needs. If we
are unable to select products that are attractive to customers, to obtain such products at costs that
allow us to sell them at a profit, or to effectively market such products, our sales, market share and
profitability could be adversely affected. If our merchandising efforts in the non-consumables area or
the higher margin areas within consumables are unsuccessful, we could be further adversely affected by
our inability to offset the lower margins associated with our consumables business.
If we cannot open, relocate or remodel stores profitably and on schedule, our planned future growth will
be impeded, which would adversely affect sales.
Our ability to open, relocate and remodel profitable stores is a key component of our planned
future growth. Our ability to timely open stores and to expand into additional market areas depends in
part on the following factors: the availability of attractive store locations; the absence of entitlement
process or occupancy delays; the ability to negotiate acceptable lease and development terms; the
ability to hire and train new personnel, especially store managers, in a cost effective manner; the ability
to identify customer demand in different geographic areas; general economic conditions; and the
availability of capital funding for expansion. Many of these factors also affect our ability to successfully
relocate stores, and many of them are beyond our control.
Delays or failures in opening new stores or completing relocations or remodels, or achieving lower
than expected sales in new stores, could materially adversely affect our growth and/or profitability. We
also may not anticipate all of the challenges imposed by the expansion of our operations and, as a
result, may not meet our targets for opening new stores, remodeling or relocating stores or expanding
profitably.
Some new stores may be located in areas where we have little or no meaningful experience or
brand recognition. Those areas may have different competitive and market conditions, consumer tastes
and discretionary spending patterns than our existing markets, as well as higher cost of entry, which
may cause our new stores to be initially less successful than stores in our existing markets. In addition,
our alternative format stores, such as our Dollar General Market and, to a lesser degree our Dollar
General Plus stores, have significantly higher capital costs than our traditional Dollar General stores,
and, as a result, may increase our financial risk if they do not perform as expected.
Many new stores will be located in areas where we have existing stores. Although we have
experience in these areas, increasing the number of locations in these markets may result in inadvertent
oversaturation and temporarily or permanently divert customers and sales from our existing stores,
thereby adversely affecting our overall financial performance.
Our profitability may be negatively affected by inventory shrinkage.
We are subject to the risk of inventory loss and theft. We experience significant inventory
shrinkage and cannot be sure that incidences of inventory loss and theft will decrease in the future or
that the measures we are taking will effectively reduce the problem of inventory shrinkage. Although
some level of inventory shrinkage is an unavoidable cost of doing business, if we were to experience
higher rates of inventory shrinkage or incur increased security costs to combat inventory theft, our
results of operations and financial condition could be affected adversely.
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10-K